Listed below are the transactions that affected the shareholders’ equity of Bran
ID: 2599864 • Letter: L
Question
Listed below are the transactions that affected the shareholders’ equity of Branch-Rickie Corporation during the period 2016–2018. At December 31, 2015, the corporation’s accounts included: ($ in 000s) Common stock, 113 million shares at $1 par $ 113,000 Paid-in capital—excess of par 678,000 Retained earnings 920,000 a. November 1, 2016, the board of directors declared a cash dividend of $0.50 per share on its common shares, payable to shareholders of record November 15, to be paid December 1. b. On March 1, 2017, the board of directors declared a property dividend consisting of corporate bonds of Warner Corporation that Branch-Rickie was holding as an investment. The bonds had a fair value of $2.9 million, but were purchased two years previously for $2.5 million. Because they were intended to be held to maturity, the bonds had not been previously written up. The property dividend was payable to shareholders of record March 13, to be distributed April 5. c. On July 12, 2017, the corporation declared and distributed a 4% common stock dividend (when the market value of the common stock was $21 per share). Cash was paid in lieu of fractional shares representing 520,000 equivalent whole shares. d. On November 1, 2017, the board of directors declared a cash dividend of $0.50 per share on its common shares, payable to shareholders of record November 15, to be paid December 1. e. On January 15, 2018, the board of directors declared and distributed a 3-for-2 stock split effected in the form of a 50% stock dividend when the market value of the common stock was $22 per share. f. On November 1, 2018, the board of directors declared a cash dividend of $0.35 per share on its common shares, payable to shareholders of record November 15, to be paid December 1. Required: 1. Prepare the journal entries that Branch-Rickie recorded during the three-year period for these transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) 2. Prepare comparative statements of shareholders’ equity for Branch-Rickie for the three-year period. Net income was $395 million, $460 million, and $520 million for 2016, 2017, and 2018, respectively. (Negative amounts should be indicated by a minus sign. Enter your answers in thousands (000's).)
Explanation / Answer
2.
BRANCH RICKIE CORPORATION
Statement of Shareholders' Equity
For the Year Ended Dec.31, 2016, 2017 and 2018
(Amount in '000)
Common Stock
Additional Paid in Capital
Retained Earnings
Total Shareholder's Equity
Jan.1, 2016
$113,000
$678,000
920000
$1,711,000
Net Income
$0
$0
396000
$396,000
Cash dividends
$0
$0
-56500
-$56,500
Dec.31, 2016
$113,000
$678,000
$1,259,500
$2,050,500
Property dividends
$0
$0
-2900
-$2,900
Common stock dividend
$4,000
$80,000
-94920
-$10,920
Net Income
$0
$0
460000
$460,000
Cash dividends
$0
$0
-58500
-$58,500
Dec.31, 2017
$117,000
$758,000
$1,563,180
$2,438,180
3-for-2 split effected in the form of stock dividend
$58,500
$1,228,500
-1287000
$0
Net Income
$0
$0
520000
$520,000
Cash dividends
$0
$0
-137475
-$137,475
Dec.31, 2018
$175,500
$1,986,500
$658,705
$2,820,705
1.Journal Entry 2016 a. November 1 – declaration date Retained earnings 56,500,000 Cash dividends payable (113 million shares at $.50/share) 56,500,000 November 15 – date of record no entry December 1 – payment date 56,500,000 Cash dividends payable 56,500,000 Cash 2017 b.March 1 – declaration date Investment in Warner bonds 400,000 Gain on appreciation of investment 400,000 ($2.9 million - $2.5 million) Retained earnings 2,900,000 Property dividends payable 2,900,000 March 13– date of record no entry April 5– payment date Property dividends payable 2,900,000 Investment in Warner bonds 2,900,000 c. July 12 Retained earnings 94,920,000 Common stock 4,000,000 Paid-in capital – excess of par 80,000,000 Cash 10,920,000 d.November 1 – declaration date Retained earnings 58,500,000 Cash dividends payable 58,500,000 November 15 – date of record no entry December 1 – payment date Cash dividends payable 58,500,000 Cash 58,500,000 2018 e. 15 jan 15-Jan November 1 – declaration date Retained earnings 137,475,000 Cash dividends payable 137,475,000 November 15 – date of record no entry December 1 – payment date Cash dividends payable 137,475,000 Cash 137,475,000Related Questions
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